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Vestas’ Engel: “We believe the gearbox is the best solution…”

David Hopwood speaks to Vestas' CEO Ditlev Engel.

NOTE: this interview took place at the World Future Energy Summit. It first ran in the March/April issue of renewable energy focus magazine. Sign up here for a free copy.

In the last few years the good name of Vestas has been mired in plant closures, profit warnings and turbine failures. But could things be on the up? Good news arrived in the shape of the Zayed Future Energy Prize – awarded to Vestas at the World Future Energy Summit in Abu Dhabi. This has helped Vestas kick back in the PR battle, as has the announcement of a new 7MW offshore turbine, and wind power consumer label.

REF: Congratulations to Vestas which won this year's Zayed Future Energy Prize. What will you do with the prize fund?

Ditlev Engel (DE): We gave half to three of the finalists [California-based clean energy advocate Terry Tamminen, who now runs a consulting firm called Seventh Generation Advisors; Barefoot College in India, which educates the rural poor, and First Solar, the CdTe thin-film solar manufacturer in Arizona, U.S.]. And the other half of the prize we gave to our new project, WindMade.

REF: The fact that this was awarded to a company in the wind space must please you a great deal?

DE: To get what people describe as the Nobel Prize of the energy industry is a fantastic recognition. Especially when you look at the members of the jury headed by Dr. Rajendra Pachauri [Chief of the Intergovernmental Panel on Climate Change – IPCC]. At the press conference following the award ceremony, he said that, 30 years ago, he was asked by the then Minister of Environment in India, whether he should focus on wind. He said, forget it – it will never work!

REF: So the award is his guilt trip then!? Seriously, though, the whole issue of the Zayed Prize being pioneered by one of the United Arab Emirates, Abu Dhabi - with its fossil fuel heritage - does make for interesting symbolism.

DE: One of the reasons we have supported the World Future Energy Summit (WFES) exhibition is because we only get to a climate solution if we work hand-in-hand with the fossil fuel industry to make a transformation. I mean, fossil fuels are going to be a major part of the base load generation for years to come, that's a fact, but we do need to start the transformation. That means we need the support of the fossil fuel industry.

We need to learn from them. I'll give you an example. Vestas has a Research & Development centre in Houston, Texas. People in this region – a big oil region - have a fantastic knowledge of the grid, and there's a lot of broad knowledge about the energy sector. So building this bridge between renewable/future energy and the established energy players is very much part of what is happening in Abu Dhabi for example.

REF: The idea of Abu Dhabi becoming a hub for clean energy technology development is well documented, but could the region really become a large demand centre for renewable energy too?

DE: I think you have to differentiate between types of demand. People normally think of demand as being the same thing as where a wind turbine would be built for example. But in a globalised world, it's not just this. There's no wind in Abu Dhabi, so we don't have a lot of hopes that we're going to see a lot of wind parks in Abu Dhabi. But hopefully by the wind industry engaging with the likes of MASDAR (Abu Dhabi Future Energy Company) for example, they are now investing in offshore wind parks in the UK.

In a globalised world, it's not just a question of “are you going to put wind turbines up right next to where you live”. It's more about engaging in developing a sector. It could be far away from home. As an example, Vestas makes 99% of its revenues outside of Denmark.

REF: There does seem to be a lot of momentum gathering behind the MASDAR/Abu Dhabi connection…

DE: We need a change agent. And one example is the World Future Energy Summit itself [this took place in January 2011]. If you look at the exhibition, there were a lot of people from other countries in the Gulf region that, as far as I can judge, were not at WFES last year in 2010.

“Fossil fuels are going to be a major part of the base load generation for years to come, that’s a fact, but we do need to start the transformation…”

- Ditlev Engel, Vestas

REF: Earlier you mentioned the involvement of Abu Dhabi with the UK's potential wind energy market. A number of your competitors have recently announced plans to invest in the UK. In light of this, will there be any plans to revisit the decision to close the Isle of Wight manufacturing facility?

DE: Well, writing a letter of intention, I can do that as well. But if you go down to the Isle of Wight, you will actually see that Vestas is constructing a huge test centre for blades. It's the biggest investment, I think, down in that part of the UK for a long time, and it's because we closed the manufacturing plant. Looking at the turbine installations that have happened since our decision to close - from a financial point of view leads me to conclude it was the right decision.

REF: So no regrets then?

DE: No, because the market was too small. That's one thing. Secondly, we said that we're very committed to developing in the UK when the market is ready. We all know that realistically it won't be before 2014 or 2015. So we have actually made a huge commitment in staying on the Isle of Wight with our enlarged R&D facilities which we'll inaugurate, I think, sometime in the spring of 2011. It's huge, it's really huge. I know some other companies have said they will probably build something, but from a Vestas perspective, if the business case is there, we'll be there.

When we were looking at this, we saw that it was going to be a number of years before the market took off. And you can't have a factory idle for a number of years. So I have to say, I still think financially it was the right decision. Now we need to show people that we are actually much more committed to the UK than some are aware of. I know that new offshore wind parks are coming up, but actually the largest one, which was inaugurated in September 2010, was one of ours!

REF: That's a fair point. You mention the improved R&D centre so let's talk R&D, and technology. Vestas has introduced the V112 [and now also announced the 7MW, V164] turbine. These are geared turbines, compared to some of the other wind players in the market who are developing the direct drive type of machine. How do you see that whole technology debate as we move forward?

DE: We don't have a religion around a gearbox or no gearbox, but we do have a religion around the cost of energy. As far as we can see today, the best cost of energy we can give to our customers is through the design, for example, of our V112 with a gearbox. [Editor's note - Vestas hadn't announced the 7MW, V164 turbine at the time of this interview].

Direct drive technology means adding new features. First of all, this is still unproven technology. Secondly, it will add some other new challenges, with the electronics as well as other aspects. I think that gearboxes today are actually much better than their reputation would suggest. Of course this has caused a lot of challenges in the industry, but if you take our V112 turbine, for example, the gearbox is made by the Bosch group. They built a new plant in Germany specifically to manufacture it. I think we've also learned over the years that there were a lot of things we didn't understand well enough.

“We don’t have a religion around a gearbox or no gearbox, but we do have a religion around the cost of energy…”

Ditlev Engel, Vestas

Just because it was the gearbox that was breaking down, that was not necessarily just down to the gearbox alone. Other issues in the turbine could have been causing this fault.

REF: So the debate needs to be about the whole turbine…

DE: When I started working at Vestas 6 years ago, we didn't monitor the turbines 24/7 like we do today. Also with the sizing of turbines, in the past we put turbines in areas where they didn't have a chance to do well. So we did as well as we could, but today there is a new sophistication there, and we've moved much further. So when you are taking decisions, you will always be influenced by experiences you've had in the past, and this sometimes makes it difficult to look very objectively at something.

So I think if people are saying we should go with direct drive, the first question should be: Why? Because we can get rid of the gearbox? OK. Why would we want to get rid of the gearbox? Well, they break down. No, they broke down.

REF: Weight, I guess, would be one major advantage to Direct Drive?

DE: My point is really that we will pursue technology where we believe the best cost of energy is. If we believe now that a turbine is much better without a gearbox, we'll design one without a gearbox. But if, from a cost standpoint and other issues we believe we'll be able to give our customers the best business case with the gearbox, then we'll do that.

So for us this is about where we believe technology in the economy will add the best value to the customer. And right now we believe the gearbox is the best solution.

REF: Interesting, and related to that, one final question - how does the structure at Vestas promote innovation?

So for us it's very much trying to make sure that people don't live in silos, but rather encourage information sharing between us, and this is, I think, how innovation happens. So for example we had innovation in Denmark, and now we have R&D centres in China, in India, in the U.S., UK and Denmark. So it's about having a boundary-less organisation, both in terms of geography, as well as with the business you focus on.

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